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Bernanke & Paulson Need to Create a Mortgage Specialist Fund

Boy, if your idea of a solution is to stop mark to mark accounting then you just don't get it. Hey maybe, I shouldn't mark to mark my PnL and the losses might just go away. The solution is twofold. Limit leverage the investment banks and other financial institutions can take. Do not mix credit with real money.

How High Leverage Has Brought Down the Whole Banking Industry

Intersting. regarding your paragraph on Lehman bros. why would you add the book value and mkt cap together. Doesnt book value incl mkt cap or whatever eqty they have?

China Increases Holdings of US Assets

I think it make sense to be concerned about the hot money flows adding to the instability of China's fixed exchange rate system. More concerning, however, is that its happening at a time when China cannot afford it. China's or even Asian economic model of exporting your way to growth via fixed FX pegs ("monkey wrneching") is about to back fire. Why? well, simply because the round trip of importing commodities into China and exporting them out as goods, is getting expensive. Thats alot of extra transportation costs to house, roundtrip. At current oil prices, China and the rest of the monkey wrenchers will find their export model no longer attractive.